Bath Rugby versus old covenants – good tackle but no try!
Bath Rugby Club have ambitious plans to build a new 18,000 seater stadium on their home pitch (known locally as the Rec) in the centre of Bath. This includes riverside regeneration, community use and extensive parking. A ruling in the High Court last month that a 1922 covenant preventing development was enforceable by local residents has potentially put these plans in jeopardy.
By looking at the case of Bath Rugby Ltd v Greenwood and Others  we will explain how old covenants can effectively thwart development and why ignoring them can be costly.
Covenants are generally enforceable between the original parties irrespective of when they were entered into. Most problems arise after the original parties sell on, when the benefit or the burden of a covenant passes through a number of successors in title. There is a difference between covenants entered into before 1 January 1926, when the Law of Property Act 1925 (LPA 1925) came into force, and those entered into afterwards.
The age of the covenant was an important factor in the Bath Rugby case. In order for the 1922 covenant to be regarded as enforceable, it had to be shown that the covenant was annexed to the land and therefore binding on successors in title to the original parties; whereas post-1926 covenants are deemed to be annexed (subject to conditions).
Facts of the case
Bath Rugby Club hold a long lease of the Rec which is subject to a restrictive covenant expressed to be for the benefit of the Bathwick Estate. The covenant was imposed in a conveyance dated 6 April 1922 and stated that nothing was to be built on the land:
“which may be or grow to be a nuisance and annoyance or disturbance or otherwise prejudicially affect the adjoining premises or the neighbourhood”.
Bath Rugby wanted to remove this covenant in order to proceed with its plans for development and applied to the court for a declaration that the covenant was unenforceable. The Club argued that there was no annexation because the land with the benefit of the covenant was not sufficiently defined in the 1922 conveyance. A number of local residents disagreed and opposed the claim. The key issue was whether they could prove that the covenant was annexed to the adjoining land which benefitted from this restriction.
The High Court dismissed Bath Rugby’s claim and held that the covenant was enforceable by virtue of annexation of the benefit and so could be enforced by those who owned the properties near the Rec, which had been part of the Bathwick Estate at the time of the 1922 conveyance.
The court examined the wording of the conveyance which stated that the covenant was for the benefit of the covenantee and "his successors in title and assigns" (not merely "successors and assigns"). The inclusion of the specific reference to "title" suggested an intention to annex the benefit of the covenant to the original covenantee’s land (as opposed to purely benefitting the covenantee personally).
Bath Rugby’s argument that it was not easy to ascertain the land which has the benefit also failed. It was sufficient that the land was described in the conveyance in such a way that it could be identified (from using extrinsic evidence if necessary); there was no requirement that obtaining the evidence had to be easy.
This case illustrates the importance of investigating title deeds at the outset before looking to redevelop land and is a useful reminder of how the law differs in relation to covenants pre and post-1926. Much of the case considered issues around identifying the extent of the land which benefitted from the covenants, so it is good practice to ensure that land (whether with the benefit or burden) is clearly defined when drafting new covenants.
Old covenants are sometimes ignored on the basis that it is unlikely anyone is able to enforce them, but that is not always the case. Obtaining planning permission is no guarantee that development can take place as existing covenants, even centuries old, can prevent this from happening. Bath Rugby had done its homework and were aware of the covenants and had even contacted the adjoining owners to advise them of its plans, but had not anticipated the court’s decision that the covenants were still binding. The Club is considering its options including whether to take this to the Court of Appeal, but whatever the outcome, it is clear that age is no barrier when it comes to the enforcement of covenants.